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Answering a Writing Questions about IT in Organizations
Instructions
The assignment itself is basically what inside the below RED box. All the information outside the
box is general guidelines and instructions that are needed to complete the assignment.
Assignment:
Please select only ONE topic from the below list and create a one-page essay
answering the question.
1. Define the IT organizational structure and how the IT organizational
structure impacts culture and change management practices. Additionally,
how does the organizational structure impact competitive advantage?
2. How do you define operational excellence? What factors are involved in
achieving operational excellence? Who (within an organization) is
responsible for operational excellence and why is this important?
Reading Materials:
•
Ch 1 to Ch 6 in the textbook “Information Technology and Organizational Learning” 3rd ED.
•
ISBN: 9781351387583
Guidelines:
•
Do NOT include Introduction nor Conclusion.
•
Only ONE pages in length (not including references page)
•
Use at least ONE quality scholarly (peer reviewed) source to support the answers.
•
Please FULLY answer all the questions.
•
Make sure to Cite and Reference your answers.
• Provide the page numbers along with in-text Citation.
•
Please ensure to provide the DOI / URL for all references.
•
Please ensure to use in-text Citation.
•
APA 7th guidelines
Information Technology
and Organizational
Learning
Managing Behavioral Change
in the Digital Age
Third Edition
Arthur M. Langer
Contents
xi
Fo re wo rd
Acknowledgments
xiii
xv
Author
Introduction
xvii
C h a p t e r 1 Th e “ R av e l l” C o r p o r at i o n
1
1
3
5
6
7
8
8
9
10
Introduction
A New Approach
The Blueprint for Integration
Enlisting Support 
Assessing Progress
Resistance in the Ranks
Line Management to the Rescue
IT Begins to Reflect
Defining an Identity for Information Technology
Implementing the Integration: A Move toward Trust and
Reflection
Key Lessons 
Defining Reflection and Learning for an Organization 
Working toward a Clear Goal 
Commitment to Quality 
Teaching Staff “Not to Know” 
Transformation of Culture 
Alignment with Administrative Departments
Conclusion
12
14
14
15
15
16
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17
19
v
vi
C o n t en t s
C h a p t e r 2 Th e IT D i l e m m a
Introduction
Recent Background
IT in the Organizational Context
IT and Organizational Structure
The Role of IT in Business Strategy
Ways of Evaluating IT
Executive Knowledge and Management of IT
IT: A View from the Top
Section 1: Chief Executive Perception of the Role of IT
Section 2: Management and Strategic Issues
Section 3: Measuring IT Performance and Activities
General Results
Defining the IT Dilemma
Recent Developments in Operational Excellence
C h a p t e r 3 Te c h n o l o gy a s a Va r ia b l e a n d R e s p o n s i v e
O r g a n i z at i o n a l D y n a m i s m
Introduction
Technological Dynamism
Responsive Organizational Dynamism
Strategic Integration
Summary
Cultural Assimilation
IT Organization Communications with “ Others” 
Movement of Traditional IT Staff
Summary
Technology Business Cycle
Feasibility
Measurement
Planning
Implementation
Evolution
Drivers and Supporters
Santander versus Citibank 
Information Technology Roles and Responsibilities
Replacement or Outsource
C h a p t e r 4 O r g a n i z at i o n a l L e a r n i n g Th e o r i e s a n d
Te c h n o l o gy
Introduction
Learning Organizations
Communities of Practice
Learning Preferences and Experiential Learning
Social Discourse and the Use of Language
Identity
Skills
21
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24
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27
28
29
32
34
35
36
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38
41
41
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42
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48
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C o n t en t s
Emotion
Linear Development in Learning Approaches
C h a p t e r 5 M a n a g i n g O r g a n i z at i o n a l L e a r n i n g a n d
Te c h n o l o gy
The Role of Line Management
Line Managers
First-Line Managers
Supervisor
Management Vectors
Knowledge Management
Ch ange Management 
Change Management for IT Organizations
Social Networks and Information Technology
C h a p t e r 6 O r g a n i z at i o n a l Tr a n s f o r m at i o n a n d t h e
Bal an ce d S c o recard
Introduction
Methods of Ongoing Evaluation
Balanced Scorecards and Discourse
Knowledge Creation, Culture, and Strategy
C h a p t e r 7 V i r t ua l Te a m s a n d O u t s o u r c i n g
Introduction
Status of Virtual Teams
Management Considerations
Dealing with Multiple Locations
Externalization
Internalization
Combination
Socialization
Externalization Dynamism
Internalization Dynamism
Combination Dynamism
Socialization Dynamism
Dealing with Multiple Locations and Outsourcing
Revisiting Social Discourse
Identity
Skills
Emotion
C h a p t e r 8 S y n e r g i s t i c U n i o n o f IT a n d
O r g a n i z at i o n a l L e a r n i n g
Introduction
Siemens AG
Aftermath
ICAP
vii
92
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1
The “R av ell” C o rp or ation
Introduction
Launching into an explanation of information technology (IT),
organizational learning, and the practical relationship into which I
propose to bring them is a challenging topic to undertake. I choose,
therefore, to begin this discussion by presenting an actual case study
that exemplifies many key issues pertaining to organizational learning, and how it can be used to improve the performance of an IT
department. Specifically, this chapter summarizes a case study of
the IT department at the Ravell Corporation (a pseudonym) in New
York City. I was retained as a consultant at the company to improve
the performance of the department and to solve a mounting political problem involving IT and its relation to other departments. The
case offers an example of how the growth of a company as a “learning ­organization”—one in which employees are constantly learning
during the normal workday (Argyris, 1993; Watkins & Marsick,
1993)—­utilized reflective practices to help it achieve the practical strategic goals it sought. Individuals in learning organizations integrate
processes of learning into their work. Therefore, a learning organization must advocate a system that allows its employees to interact, ask
questions, and provide insight to the business. The learning organization will ultimately promote systematic thinking, and the building
of organizational memory (Watkins & Marsick, 1993). A learning
organization (discussed more fully in Chapter 4) is a component of
the larger topic of organizational learning.
The Ravell Corporation is a firm with over 500 employees who,
over the years, had become dependent on the use of technology to
run its business. Its IT department, like that of many other companies, was isolated from the rest of the business and was regarded as
a peripheral entity whose purpose was simply to provide technical
support. This was accompanied by actual physical isolation—IT was
1
2
IN F O RM ATI O N T EC HN O L O GY
placed in a contained and secure location away from mainstream
operations. As a result, IT staff rarely engaged in active discourse
with other staff members unless specific meetings were called relating to a particular project. The Ravell IT department, therefore, was
not part of the community of organizational learning—it did not
have the opportunity to learn along with the rest of the organization, and it was never asked to provide guidance in matters of general relevance to the business as a whole. This marginalized status
resulted in an us-versus-them attitude on the part of IT and non-IT
personnel alike.
Much has been written about the negative impact of marginalization on individuals who are part of communities. Schlossberg
(1989) researched adults in various settings and how marginalization affected their work and self-efficacy. Her theory on marginalization and mattering is applied to this case study because of
its relevance and similarity to her prior research. For example, IT
represents similar characteristics to a separate group on a college
campus or in a workplace environment. Its physical isolation can
also be related to how marginalized groups move away from the
majority population and function without contact. The IT director, in particular, had cultivated an adversarial relationship with his
peers. The director had shaped a department that fueled his view of
separation. This had the effect of further marginalizing the position of IT within the organization. Hand in hand with this form of
separatism came a sense of actual dislike on the part of IT personnel
for other employees. IT staff members were quick to point fingers
at others and were often noncommunicative with members of other
departments within the organization. As a result of this kind of
behavior, many departments lost confidence in the ability of IT to
provide support; indeed, the quality of support that IT furnished
had begun to deteriorate. Many departments at Ravell began to hire
their own IT support personnel and were determined to create their
own information systems subdepartments. This situation eventually
became unacceptable to management, and the IT director was terminated. An initiative was begun to refocus the department and its
position within the organization. I was retained to bring about this
change and to act as the IT director until a structural transformation of the department was complete.
T he “ Rav el l” C o r p o r ati o n
3
A New Approach
My mandate at Ravell was initially unclear—I was to “fix” the
­problem; the specific solution was left up to me to design and implement. My goal became one of finding a way to integrate IT fully into
the organizational culture at Ravell. Without such integration, IT
would remain isolated, and no amount of “fixing” around this issue
would address the persistence of what was, as well, a cultural problem. Unless IT became a true part of the organization as a whole,
the entire IT staff could be replaced without any real change having
occurred from the organization’s perspective. That is, just replacing
the entire IT staff was an acceptable solution to senior management.
The fact that this was acceptable suggested to me that the knowledge
and value contained in the IT department did not exist or was misunderstood by the senior management of the firm. In my opinion,
just eliminating a marginalized group was not a solution because I
expected that such knowledge and value did exist, and that it needed
to be investigated properly. Thus, I rejected management’s option and
began to formulate a plan to better understand the contributions that
could be made by the IT department. The challenge was threefold: to
improve the work quality of the IT department (a matter of performance), to help the department begin to feel itself a part of the organization as a whole and vice versa (a matter of cultural assimilation),
and to persuade the rest of the organization to accept the IT staff as
equals who could contribute to the overall direction and growth of the
organization (a fundamental matter of strategic integration).
My first step was to gather information. On my assignment to the
position of IT director, I quickly arranged a meeting with the IT
department to determine the status and attitudes of its personnel.
The IT staff meeting included the chief financial officer (CFO), to
whom IT reported. At this meeting, I explained the reasons behind
the changes occurring in IT management. Few questions were asked;
as a result, I immediately began scheduling individual meetings with
each of the IT employees. These employees varied in terms of their
position within the corporate hierarchy, in terms of salary, and in
terms of technical expertise. The purpose of the private meetings was
to allow IT staff members to speak openly, and to enable me to hear
their concerns. I drew on the principles of action science, pioneered
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IN F O RM ATI O N T EC HN O L O GY
by Argyris and Schö n (1996), designed to promote individual selfreflection regarding behavior patterns, and to encourage a productive exchange among individuals. Action science encompasses a range
of methods to help individuals learn how to be reflective about their
actions. By reflecting, individuals can better understand the outcomes
of their actions and, especially, how they are seen by others. This was
an important approach because I felt learning had to start at the individual level as opposed to attempting group learning activities. It was
my hope that the discussions I orchestrated would lead the IT staff to
a better understanding than they had previously shown, not only of
the learning process itself, but also of the significance of that process.
I pursued these objectives by guiding them to detect problem areas in
their work and to undertake a joint effort to correct them (Argyris,
1993; Arnett, 1992).
Important components of reflective learning are single-loop and
double-loop learning. Single-loop learning requires individuals to
reflect on a prior action or habit that needs to be changed in the future
but does not require individuals to change their operational procedures with regard to values and norms. Double-loop learning, on the
other hand, does require both change in behavior and change in operational procedures. For example, people who engage in double-loop
learning may need to adjust how they perform their job, as opposed to
just the way they communicate with others, or, as Argyris and Schö n
(1996, p. 22) state, “the correction of error requires inquiry through
which organizational values and norms themselves are modified.”
Despite my efforts and intentions, not all of the exchanges were
destined to be successful. Many of the IT staff members felt that the
IT director had been forced out, and that there was consequently
no support for the IT function in the organization. There was also
clear evidence of internal political division within the IT department;
members openly criticized each other. Still other interviews resulted
in little communication. This initial response from IT staff was disappointing, and I must admit I began to doubt whether these learning
methods would be an antidote for the department. Replacing people
began to seem more attractive, and I now understood why many managers prefer to replace staff, as opposed to investing in their transformation. However, I also knew that learning is a gradual process and
that it would take time and trust to see results.
T he “ Rav el l” C o r p o r ati o n
5
I realized that the task ahead called for nothing short of a total cultural transformation of the IT organization at Ravell. Members of the
IT staff had to become flexible and open if they were to become more
trusting of one another and more reflective as a group (Garvin, 2000;
Schein, 1992). Furthermore, they had to have an awareness of their
history, and they had to be willing to institute a vision of partnering
with the user community. An important part of the process for me
was to accept the fact that the IT staff were not habitually inclined to
be reflective. My goal then was to create an environment that would
foster reflective learning, which would in turn enable a change in
individual and organizational values and norms (Senge, 1990).
The Blueprint for Integration
Based on information drawn from the interviews, I developed a preliminary plan to begin to integrate IT into the day-to-day operations
at Ravell, and to bring IT personnel into regular contact with other
staff members. According to Senge (1990), the most productive learning occurs when skills are combined in the activities of advocacy and
inquiry. My hope was to encourage both among the staff at Ravell. The
plan for integration and assimilation involved assigning IT resources
to each department; that is, following the logic of the self-dissemination of technology, each department would have its own dedicated IT
person to support it. However, just assigning a person was not enough,
so I added the commitment to actually relocate an IT person into each
physical area. This way, rather than clustering together in an area of
their own, IT people would be embedded throughout the organization, getting first-hand exposure to what other departments did, and
learning how to make an immediate contribution to the productivity of these departments. The on-site IT person in each department
would have the opportunity to observe problems when they arose—
and hence, to seek ways to prevent them—and, significantly, to share
in the sense of accomplishment when things went well. To reinforce
their commitment to their respective areas, I specified that IT personnel were to report not only to me but also to the line manager in their
respective departments. In addition, these line managers were to have
input on the evaluation of IT staff. I saw that making IT staff officially accountable to the departments they worked with was a tangible
6
IN F O RM ATI O N T EC HN O L O GY
way to raise their level of commitment to the organization. I hoped
that putting line managers in a supervisory position, would help build
a sense of teamwork between IT and non-IT personnel. Ultimately,
the focus of this approach was to foster the creation of a tolerant and
supportive cultural climate for IT within the various departments; an
important corollary goal here was also to allow reflective reviews of
performance to flourish (Garvin, 1993).
Enlisting Support
Support for this plan had to be mustered quickly if I was to create an
environment of trust. I had to reestablish the need for the IT function within the company, show that it was critical for the company’s
business operations, and show that its integration posed a unique
challenge to the company. However, it was not enough just for me
to claim this. I also had to enlist key managers to claim it. Indeed,
employees will cooperate only if they believe that self-assessment and
critical thinking are valued by management (Garvin, 2000). I decided
to embark on a process of arranging meetings with specific line managers in the organization. I selected individuals who would represent
the day-to-day management of the key departments. If I could get
their commitment to work with IT, I felt it could provide the stimulus
we needed. Some line managers were initially suspicious of the effort
because of their prior experiences with IT. However, they generally
liked the idea of integration and assimilation that was presented to
them, and agreed to support it, at least on a trial basis.
Predictably, the IT staff were less enthusiastic about the idea. Many
of them felt threatened, fearing that they were about to lose their
independence or lose the mutual support that comes from being in a
cohesive group. I had hoped that holding a series of meetings would
help me gain support for the restructuring concept. I had to be careful to ensure that the staff members would feel that they also had an
opportunity to develop a plan, that they were confident would work.
During a number of group sessions, we discussed various scenarios of
how such a plan might work. I emphasized the concepts of integration and assimilation, and that a program of their implementation
would be experimental. Without realizing it, I had engaged IT staff
members in a process of self-governance. Thus, I empowered them
T he “ Rav el l” C o r p o r ati o n
7
to feel comfortable with voicing new ideas, without being concerned
that they might be openly criticized by me if I did not agree. This process also encouraged individuals to begin thinking more as a group.
Indeed, by directing the practice of constructive criticism among
the IT staff, I had hoped to elicit a higher degree of reflective action
among the group and to show them that they had the ability to learn
from one another as well as the ability to design their own roles in the
organization (Argyris, 1993). Their acceptance of physical integration
and, hence, cultural assimilation became a necessary condition for
the ability of the IT group, to engage in greater reflective behavior
(Argyris & Schö n, 1996).
Assessing Progress
The next issue concerned individual feedback. How was I to let each
person know how he or she was doing? I decided first, to get feedback
from the larger organizational community. This was accomplished
by meeting with the line managers and obtaining whatever feedback was available from them. I was surprised at the large quantity
of information they were willing to offer. The line managers were not
shy about participating, and their input allowed me to complete two
objectives: (1) to understand how the IT staff was being perceived in
its new assignment and (2) to create a social and reflective relationship between IT individuals and the line managers. The latter objective was significant, for if we were to be successful, the line managers
would have to assist us in the effort to integrate and assimilate IT
functions within their community.
After the discussions with managers were completed, individual
meetings were held with each IT staff member to discuss the feedback.
I chose not to attribute the feedback to specific line managers but rather
to address particular issues by conveying the general consensus about
them. Mixed feelings were also disclosed by the IT staff. After conveying the information, I listened attentively to the responses of IT staff
members. Not surprisingly, many of them responded to the feedback
negatively and defensively. Some, for example, felt that many technology
users were unreasonable in their expectations of IT. It was important for
me as facilitator not to find blame among them, particularly if I was to
be a participant in the learning organization (Argyris & Schön, 1996).
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IN F O RM ATI O N T EC HN O L O GY
Resistance in the Ranks
Any major organizational transformation is bound to elicit resistance
from some employees. The initiative at Ravell proved to be no exception. Employees are not always sincere, and some individuals will
engage in political behavior that can be detrimental to any organizational learning effort. Simply put, they are not interested in participating, or, as Marsick (1998) states, “It would be naï ve to expect that
everyone is willing to play on an even field (i.e., fairly).” Early in the
process, the IT department became concerned that its members spent
much of their time trying to figure out how best to position themselves
for the future instead of attending to matters at hand. I heard from
other employees that the IT staff felt that they would live through my
tenure; that is, just survive until a permanent IT director was hired. It
became difficult at times to elicit the truth from some members of the
IT staff. These individuals would skirt around issues and deny making
statements that were reported by other employees rather than confront problems head on. Some IT staff members would criticize me in
front of other groups and use the criticism as proof that the plan for
a general integration was bound to fail. I realized in a most tangible
sense that pursuing change through reflective practice does not come
without resistance, and that this resistance needs to be factored into
the planning of any such organizationally transformative initiative.
Line Management to the Rescue
At the time that we were still working through the resistance within
IT, the plan to establish a relationship with line management began
to work. A number of events occurred that allowed me to be directly
involved in helping certain groups solve their IT problems. Word
spread quickly that there was a new direction in IT that could be
trusted. Line management support is critical for success in such transformational situations. First, line management is typically comprised
of people from the ranks of supervisors and middle managers, who are
responsible for the daily operations of their department. Assuming
they do their jobs, senior management will cater to their needs and
listen to their feedback. The line management of any organization, necessarily engaged to some degree in the process of learning
T he “ Rav el l” C o r p o r ati o n
9
(a “learning organization”), is key to its staff. Specifically, line managers are responsible for operations personnel; at the same time, they
must answer to senior management. Thus, they understand both executive and operations perspectives of the business (Garvin, 2000). They
are often former staff members themselves and usually have a high
level of technical knowledge. Upper management, while important
for financial support, has little effect at the day-to-day level, yet this is
the level at which the critical work of integration and the building of
a single learning community must be done.
Interestingly, the line management organization had previously
had no shortage of IT-related problems. Many of these line managers
had been committed to developing their own IT staffs; however, they
quickly realized that the exercise was beyond their expertise, and that
they needed guidance and leadership. Their participation in IT staff
meetings had begun to foster a new trust in the IT department, and
they began to see the possibilities of working closely with IT to solve
their problems. Their support began to turn toward what Watkins and
Marsick (1993, p. 117) call “creating alignment by placing the vision
in the hands of autonomous, cross-functional synergetic teams.” The
combination of IT and non-IT teams began to foster a synergy among
the communities, which established new ideas about how best to use
technology.
IT Begins to Reflect
Although it was initially difficult for some staff members to accept,
they soon realized that providing feedback opened the door to the
process of self-reflection within IT. We undertook a number of exercises, to help IT personnel understand how non-IT personnel perceived them, and how their own behavior may have contributed to
these perceptions. To foster self-reflection, I adopted a technique
developed by Argyris called “the left-hand column.” In this technique,
individuals use the right-hand column of a piece of paper to transcribe
dialogues that they felt had not resulted in effective communication.
In the left-hand column of the same page, participants are to write
what they were really thinking at the time of the dialogue but did not
say. This exercise is designed to reveal underlying assumptions that
speakers may not be aware of during their exchanges and that may be
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IN F O RM ATI O N T EC HN O L O GY
impeding their communication with others by giving others a wrong
impression. The exercise was extremely useful in helping IT personnel
understand how others in the organization perceived them.
Most important, the development of reflective skills, according to
Schö n (1983), starts with an individual’s ability to recognize “leaps
of abstraction”—the unconscious and often inaccurate generalizations
people make about others based on incomplete information. In the
case of Ravell, such generalizations were deeply entrenched among its
various personnel sectors. Managers tended to assume that IT staffers
were “just techies,” and that they therefore held fundamentally different values and had little interest in the organization as a whole. For
their part, the IT personnel were quick to assume that non-IT people
did not understand or appreciate the work they did. Exposing these
“leaps of abstraction” was key to removing the roadblocks that prevented Ravell from functioning as an integrated learning organization.
Defining an Identity for Information Technology
It was now time to start the process of publicly defining the identity
of IT. Who were we, and what was our purpose? Prior to this time,
IT had no explicit mission. Instead, its members had worked on an
ad hoc basis, putting out fires and never fully feeling that their work
had contributed to the growth or development of the organization as
a whole. This sense of isolation made it difficult for IT members to
begin to reflect on what their mission should or could be. I organized
a series of meetings to begin exploring the question of a mission, and I
offered support by sharing exemplary IT mission statements that were
being implemented in other organizations. The focus of the meetings
was not on convincing them to accept any particular idea but rather to
facilitate a reflective exercise with a group that was undertaking such
a task for the first time (Senge, 1990).
The identity that emerged for the IT department at Ravell was different from the one implicit in their past role. Our new mission would
be to provide technical support and technical direction to the organization. Of necessity, IT personnel would remain specialists, but they
were to be specialists who could provide guidance to other departments in addition to helping them solve and prevent problems. As
they became more intimately familiar with what different departments
T he “ Rav el l” C o r p o r ati o n
11
did—and how these departments contributed to the organization as a
whole—IT professionals would be able to make better informed recommendations. The vision was that IT people would grow from being
staff who fixed things into team members who offered their expertise
to help shape the strategic direction of the organization and, in the
process, participate fully in organizational growth and learning.
To begin to bring this vision to life, I invited line managers to
attend our meetings. I had several goals in mind with this invitation. Of course, I wanted to increase contact between IT and non-IT
people; beyond this, I wanted to give IT staff an incentive to change
by making them feel a part of the organization as a whole. I also got
a commitment from IT staff that we would not cover up our problems during the sessions, but would deal with all issues with trust
and honesty. I also believed that the line managers would reciprocate
and allow us to attend their staff meetings. A number of IT individuals were concerned that my approach would only further expose
our problems with regard to quality performance, but the group as
a whole felt compelled to stick with the beliefs that honesty would
always prevail over politics. Having gained insight into how the rest of
the organization perceived them, IT staff members had to learn how
to deal with disagreement and how to build consensus to move an
agenda forward. Only then could reflection and action be intimately
intertwined so that after-the-fact reviews could be replaced with periods of learning and doing (Garvin, 2000).
The meetings were constructive, not only in terms of content issues
handled in the discussions, but also in terms of the number of line
managers who attended them. Their attendance sent a strong message
that the IT function was important to them, and that they understood that they also had to participate in the new direction that IT
was taking. The sessions also served as a vehicle to demonstrate how
IT could become socially assimilated within all the functions of the
community while maintaining its own identity.
The meetings were also designed as a venue for group members to
be critical of themselves. The initial meetings were not successful in
this regard; at first, IT staff members spent more time blaming others than reflecting on their own behaviors and attitudes. These sessions were difficult in that I would have to raise unpopular questions
and ask whether the staff had truly “looked in the mirror” concerning
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some of the problems at hand. For example, one IT employee found
it difficult to understand why a manager from another department
was angry about the time it took to get a problem resolved with his
computer. The problem had been identified and fixed within an hour,
a time frame that most IT professionals would consider very responsive. As we looked into the reasons why the manager could have been
justified in his anger, it emerged that the manager had a tight deadline
to meet. In this situation, being without his computer for an hour was
a serious problem.
Although under normal circumstances a response time of one hour
is good, the IT employee had failed to ask about the manager’s particular circumstance. On reflection, the IT employee realized that
putting himself in the position of the people he was trying to support
would enable him to do his job better. In this particular instance, had
the IT employee only understood the position of the manager, there
were alternative ways of resolving the problem that could have been
implemented much more quickly.
Implementing the Integration: A Move toward Trust and Reflection
As communication became more open, a certain synergy began to
develop in the IT organization. Specifically, there was a palpable rise
in the level of cooperation and agreement, with regard to the overall goals set during these meetings. This is not to suggest that there
were no disagreements but rather that discussions tended to be more
constructive in helping the group realize its objective of providing
outstanding technology support to the organization. The IT staff
also felt freer to be self-reflective by openly discussing their ideas and
their mistakes. The involvement of the departmental line managers also gave IT staff members the support they needed to carry out
the change. Slowly, there developed a shift in behavior in which the
objectives of the group sharpened its focus on the transformation of
the department, on its acknowledgment of successes and failures, and
on acquiring new knowledge, to advance the integration of IT into
the core business units.
Around this time, an event presented itself that I felt would allow
the IT department to establish its new credibility and authority to
the other departments: the physical move of the organization to a
T he “ Rav el l” C o r p o r ati o n
13
new location. The move was to be a major event, not only because
it ­represented the relocation of over 500 people and the technological infrastructure they used on a day-to-day basis, but also because
the move was to include the transition of the media communications
systems of the company, to digital technology. The move required
tremendous technological work, and the organization decided to
perform a “technology acceleration,” meaning that new technology
would be introduced more quickly because of the opportunity presented by the move. The entire moving process was to take a year, and
I was immediately summoned to work with the other departments in
determining the best plan to accomplish the transition.
For me, the move became an emblematic event for the IT group at
Ravell. It would provide the means by which to test the creation of,
and the transitioning into, a learning organization. It was also to provide a catalyst for the complete integration and assimilation of IT into
the organization as a whole. The move represented the introduction
of unfamiliar processes in which “conscious reflection is … necessary
if lessons are to be learned” (Garvin, 2000, p. 100). I temporarily
reorganized IT employees into “SWAT” teams (subgroups formed
to deal with defined problems in high-pressure environments), so
that they could be eminently consumed in the needs of their community partners. Dealing with many crisis situations helped the IT
department change the existing culture by showing users how to better deal with technology issues in their everyday work environment.
Indeed, because of the importance of technology in the new location,
the core business had an opportunity to embrace our knowledge and
to learn from us.
The move presented new challenges every day, and demanded
openness and flexibility from everyone. Some problems required that
IT listen intently to understand and meet the needs of its community partners. Other situations put IT in the role of teaching; assessing needs and explaining to other departments what was technically
possible, and then helping them to work out compromises based on
technical limitations. Suggestions for IT improvement began to come
from all parts of the organization. Ideas from others were embraced
by IT, demonstrating that employees throughout the organization
were learning together. IT staff behaved assertively and without fear
of failure, suggesting that, perhaps for the first time, their role had
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extended beyond that of fixing what was broken to one of helping
to guide the organization forward into the future. Indeed, the move
established the kind of “special problem” that provided an opportunity
for growth in personal awareness through reflection (Moon, 1999).
The move had proved an ideal laboratory for implementing the
IT integration and assimilation plan. It provided real and important
opportunities for IT to work hand in hand with other departments—
all focusing on shared goals. The move fostered tremendous camaraderie within the organization and became an excellent catalyst for
teaching reflective behavior. It was, if you will, an ideal project in
which to show how reflection in action can allow an entire organization to share in the successful attainment of a common goal. Because
it was a unique event, everyone—IT and non-IT personnel alike—
made mistakes, but this time, there was virtually no finger-pointing.
People accepted responsibility collectively and cooperated in finding
solutions. When the company recommenced operations from its new
location—on time and according to schedule—no single group could
claim credit for the success; it was universally recognized that success
had been the result of an integrated effort.
Key Lessons
The experience of the reorganization of the IT department at Ravell
can teach us some key lessons with respect to the cultural transformation and change of marginalized technical departments, generally.
Defining Reflection and Learning for an Organization
IT personnel tend to view learning as a vocational event. They generally look to increase their own “technical” knowledge by attending
special training sessions and programs. However, as Kegan (1998)
reminds us, there must be more: “Training is really insufficient as a
sole diet of education—it is, in reality a subset of education.” True
education involves transformation, and transformation, according to
Kegan, is the willingness to take risks, to “get out of the bedroom of
our comfortable world.” In my work at Ravell, I tried to augment this
“diet” by embarking on a project that delivered both vocational training and education through reflection. Each IT staff person was given
T he “ Rav el l” C o r p o r ati o n
15
one week of technical training per year to provide vocational development. But beyond this, I instituted weekly learning sessions in which
IT personnel would meet without me and produce a weekly memo of
“reflection.” The goal of this practice was to promote dialogue, in the
hope that IT would develop a way to deal with its fears and mistakes
on its own. Without knowing it, I had begun the process of creating
a discursive community in which social interactions could act as instigators of reflective behavior leading to change.
Working toward a Clear Goal
The presence of clearly defined, measurable, short-term objectives
can greatly accelerate the process of developing a “learning organization” through reflective practice. At Ravell, the move into new physical quarters provided a common organizational goal toward which
all participants could work. This goal fostered cooperation among IT
and non-IT employees and provided an incentive for everyone to work
and, consequently, learn together. Like an athletic team before an
important game, or even an army before battle, the IT staff at Ravell
rallied around a cause and were able to use reflective practices to help
meet their goals. The move also represented what has been termed an
“eye-opening event,” one that can trigger a better understanding of a
culture whose differences challenge one’s presuppositions (Mezirow,
1990). It is important to note, though, that while the move accelerated
the development of the learning organization as such, the move itself
would not have been enough to guarantee the successes that followed
it. Simply setting a deadline is no substitute for undergoing the kind
of transformation necessary for a consummately reflective process.
Only as the culmination of a process of analysis, socialization, and
trust building, can an event like this speed the growth of a learning
organization.
Commitment to Quality
Apart from the social challenges it faced in merging into the core
business, the IT group also had problems with the quality of its output. Often, work was not performed in a professional manner. IT
organizations often suffer from an inability to deliver on schedule,
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and Ravell was no exception. The first step in addressing the quality problem, was to develop IT’s awareness of the importance of the
problem, not only in my estimation but in that of the entire company.
The IT staff needed to understand how technology affected the dayto-day operations of the entire company. One way to start the dialogue on quality is to first initiate one about failures. If something was
late, for instance, I asked why. Rather than addressing the problems
from a destructive perspective (Argyris & Schö n, 1996; Schein, 1992;
Senge, 1990), the focus was on encouraging IT personnel to understand the impact of their actions—or lack of action—on the company.
Through self-reflection and recognition of their important role in the
organization, the IT staff became more motivated than before to perform higher quality work.
Teaching Staff “Not to Know”
One of the most important factors that developed out of the process
of integrating IT was the willingness of the IT staff “not to know.”
The phenomenology of “not knowing” or “knowing less” became the
facilitator of listening; that is, by listening, we as individuals are better
able to reflect. This sense of not knowing also “allows the individual
to learn an important lesson: the acceptance of what is, without our
attempts to control, manipulate, or judge” (Halifax, 1999, p. 177). The
IT staff improved their learning abilities by suggesting and adopting
new solutions to problems. An example of this was the creation of a
two-shift help desk that provided user support during both day and
evening. The learning process allowed IT to contribute new ideas to
the community. More important, their contributions did not dramatically change the community; instead, they created gradual adjustments that led to the growth of a new hybrid culture. The key to
this new culture was its ability to share ideas, accept error as a reality
(Marsick, 1998), and admit to knowing less (Halifax, 1999).
Transformation of Culture
Cultural changes are often slow to develop, and they occur in small
intervals. Furthermore, small cultural changes may even go unnoticed
or may be attributed to factors other than their actual causes. This
T he “ Rav el l” C o r p o r ati o n
17
raises the issue of the importance of cultural awareness and our ability
to measure individual and group performance. The history of the IT
problems at Ravell made it easy for me to make management aware of
what we were newly attempting to accomplish and of our reasons for
creating dialogues about our successes and failures. Measurement and
evaluation of IT performance are challenging because of the intricacies involved in determining what represents success. I feel that one
form of measurement can be found in the behavioral patterns of an
organization. When it came time for employee evaluations, reviews
were held with each IT staff member. Discussions at evaluation
reviews focused on the individuals’ perceptions of their role, and how
they felt about their job as a whole. The feedback from these review
meetings suggested that the IT staff had become more devoted, and
more willing to reflect on their role in the organization, and, generally, seemed happier at their jobs than ever before. Interestingly,
and significantly, they also appeared to be having fun at their jobs.
This happiness propagated into the community and influenced other
supporting departments to create similar infrastructures that could
reproduce our type of successes. This interest was made evident by
frequent inquiries I received from other departments about how the
transformation of IT was accomplished, and how it might be translated to create similar changes in staff behavior elsewhere in the company. I also noticed that there were fewer complaints and a renewed
ability for the staff to work with our consultants.
Alignment with Administrative Departments
Ravell provided an excellent lesson about the penalties of not aligning properly with other strategic and operational partners in a firm.
Sometimes, we become insistent on forcing change, especially when
placed in positions that afford a manager power—the power to get
results quickly and through force. The example of Ravell teaches us
that an approach of power will not ultimately accomplish transformation of the organization. While senior management can authorize and
mandate change, change usually occurs much more slowly than they
wish, if it occurs at all. The management ranks can still push back
and cause problems, if not sooner, then later. While I aligned with
the line units, I failed to align with important operational partners,
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particularly human resources (HR). HR in my mind at that time
was impeding my ability to accomplish change. I was frustrated and
determined to get things done by pushing my agenda. This approach
worked early on, but I later discovered that the HR management was
bitter and devoted to stopping my efforts. The problems I encountered
at Ravell are not unusual for IT organizations. The historical issues
that affect the relationship between HR and IT are as follows:
• IT has unusual staff roles and job descriptions that can be
inconsistent with the rest of the organization.
• IT tends to have complex working hours and needs.
• IT has unique career paths that do not “fit” with HR standards.
• IT salary structures shift more dynamically and are very sensitive to market conditions.
• IT tends to operate in silos.
The challenge, then, to overcome these impediments requires IT to
•
•
•
•
reduce silos and IT staff marginalization
achieve better organization-wide alignment
develop shared leadership
define and create an HR/IT governance model
The success of IT/HR alignment should follow practices similar
to those I instituted with the line managers at Ravell, specifically the
following:
• Successful HR/IT integration requires organizational learning techniques.
• Alignment requires an understanding of the relationship
between IT investments and business strategy.
• An integration of IT can create new organizational cultures
and structures.
• HR/IT alignment will likely continue to be dynamic in
nature, and evolve at an accelerated pace.
The oversight of not integrating better with HR cost IT dearly at
Ravell. HR became an undisclosed enemy—that is, a negative force
against the entire integration. I discovered this problem only later, and
was never able to bring the HR department into the fold. Without
HR being part of the learning organization, IT staff continued to
T he “ Rav el l” C o r p o r ati o n
19
struggle with aligning their professional positions with those of the
other departments. Fortunately, within two years the HR vice president retired, which inevitably opened the doors for a new start.
In large IT organizations, it is not unusual to have an HR member
assigned to focus specifically on IT needs. Typically, it is a joint position
in which the HR individual in essence works for the IT executive. This
is an effective alternative in that the HR person becomes versed in IT
needs and can properly represent IT in the area of head count needs and
specific titles. Furthermore, the unique aspect of IT organizations is in
the hybrid nature of their staff. Typically, a number of IT staff members
are consultants, a situation that presents problems similar to the one I
encountered at Ravell—that is, the resentment of not really being part
of the organization. Another issue is that many IT staff members are
outsourced across the globe, a situation that brings its own set of challenges. In addition, the role of HR usually involves ensuring compliance
with various regulations. For example, in many organizations, a consultant is permitted to work on site for only one year before U.S. government regulations force the company to hire them as employees. The
HR function must work closely with IT to enforce these regulations.
Yet another important component of IT and HR collaboration is talent
management. That is, HR must work closely with IT to understand new
roles and responsibilities as they develop in the organization. Another
challenge is the integration of technology into the day-to-day business
of a company, and the question of where IT talent should be dispersed
throughout the organization. Given this complex set of challenges, IT
alone cannot facilitate or properly represent itself, unless it aligns with
the HR departments. This becomes further complex with the proliferation of IT virtual teams across the globe that create complex structures
that often have different HR ramifications, both legally and culturally.
Virtual team management is discussed further in the book.
Conclusion
This case study shows that strategic integration of technical resources
into core business units can be accomplished, by using those aspects of
organizational learning that promote reflection in action. This kind of
integration also requires something of a concomitant form of assimilation, on the cultural level (see Chapter 3). Reflective thinking fosters the
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development of a learning organization, which in turn allows for the
integration of the “other” in its various organizational manifestations.
The experience of this case study also shows that the success of organizational learning will depend on the degree of cross fertilization achievable in terms of individual values and on the ability of the community
to combine new concepts and beliefs, to form a hybrid culture. Such a
new culture prospers with the use of organizational learning strategies
to enable it to share ideas, accept mistakes, and learn to know less as a
regular part their discourse and practice in their day-to-day operations.
Another important conclusion from the Ravell experience is that
time is an important factor to the success of organizational learning
approaches. One way of dealing with the problem of time is with
patience—something that many organizations do not have. Another
element of success came in the acceleration of events (such as the relocation at Ravell), which can foster a quicker learning cycle and helps
us see results faster. Unfortunately, impatience with using organizational learning methods is not an acceptable approach because it will
not render results that change individual and organizational behavior.
Indeed, I almost changed my approach when I did not get the results
I had hoped for early in the Ravell engagement. Nevertheless, my persistence paid off. Finally, the belief that replacing the staff, as opposed
to investing in its knowledge, results from a faulty generalization. I
found that most of the IT staff had much to contribute to the organization and, ultimately, to help transform the culture. Subsequent
chapters of this book build on the Ravell experience and discuss specific methods for integrating organizational learning and IT in ways
that can improve competitive advantage.
Another recent perception, which I discuss further in Chapter 4,
is the commitment to “complete” integration. Simply put, IT cannot
select which departments to work with, or choose to participate only
with line managers; as they say, it is “all or nothing at all.” Furthermore,
as Friedman (2007, p. 8) states “The world is flat.” Certainly, part of
the “flattening” of the world has been initiated by technology, but it
has also created overwhelming challenges for seamless integration of
technology within all operations. The flattening of the world has created yet another opportunity for IT to better integrate itself into what
is now an everyday challenge for all organizations.
2
The IT D ilemma
Introduction
We have seen much discussion in recent writing about how information technology has become an increasingly significant component of
corporate business strategy and organizational structure (Bradley &
Nolan, 1998; Levine et al., 2000; Siebel, 1999). But, do we know
about the ways in which this significance takes shape? Specifically,
what are the perceptions and realities regarding the importance of
technology from organization leaders, business managers, and core
operations personnel? Furthermore, what forms of participation
should IT assume within the rest of the organization?
The isolation of IT professionals within their companies often prevents them from becoming active participants in the organization.
Technology personnel have long been criticized for their inability to
function as part of the business and are often seen as a group falling
outside business cultural norms (Schein, 1992). They are frequently
stereotyped as “techies” and segregated into areas of the business
where they become marginalized and isolated from the rest of the
organization. It is my experience, based on case studies such as the
one reviewed in Chapter 1 (the Ravell Corporation), that if an organization wishes to absorb its IT department into its core culture, and
if it wishes to do so successfully, the company as a whole must be prepared to consider structural changes and to seriously consider using
organizational learning approaches.
The assimilation of technical people into an organization presents
a special challenge in the development of true organizational learning
practices (developed more fully in Chapter 3). This challenge stems
from the historical separation of a special group that is seen as standing outside the everyday concerns of the business. IT is generally
acknowledged as having a key support function in the organization as
a whole. However, empirical studies have shown that it is a challenging
21
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endeavor to successfully integrate IT personnel into the learning fold
and to do so in such a way that they not only are accepted, but also
understood to be an important part of the social and cultural structure of the business (Allen & Morton, 1994; Cassidy, 1998; Langer,
2007; Schein, 1992; Yourdon, 1998).
In his book In Over Our Heads, Kegan (1994) discusses the challenges of dealing with individual difference. IT personnel have been
consistently regarded as “different” fixtures; as outsiders who do not
quite fit easily into the mainstream organization. Perhaps, because
of their technical practices, which may at times seem “foreign,” or
because of perceived differences in their values, IT personnel can
become marginalized; imagined as outside the core social structures
of business. As in any social structure, marginalization can result in
the withdrawal of the individual from the community (Schlossberg,
1989). As a result, many organizations are choosing to outsource their
IT services rather than confront and address the issues of cultural
absorption and organizational learning. The outsourcing alternative
tends to further distance the IT function from the core organization, thus increasing the effects of marginalization. Not only does the
outsourcing of IT personnel separate them further from their peers,
but it also invariably robs the organization of a potentially important
contributor to the social growth and organizational learning of the
business. For example, technology personnel should be able to offer
insight into how technology can support further growth and learning
within the organization. In addition, IT personnel are usually trained
to take a logical approach to problem solving; as a result, they should
be able to offer a complementary focus on learning. Hence, the integration of IT staff members into the larger business culture can offer
significant benefits to an organization in terms of learning and organizational growth.
Some organizations have attempted to improve communications
between IT and non-IT personnel through the use of an intermediary who can communicate easily with both groups. This intermediary
is known in many organizations as the business analyst. Typically, the
business analyst will take responsibility for the interface between IT
and the larger business community. Although a business analyst may
help facilitate communication between IT and non-IT personnel,
this arrangement cannot help but carry the implication that different
T he IT Dil emma
23
“languages” are spoken by these two groups and, by extension, that
direct communication is not possible. Therefore, the use of such an
intermediary suffers the danger of failing to promote integration
between IT and the rest of the organization; in fact, it may serve to
keep the two camps separate. True integration, in the form of direct
contact between IT and non-IT personnel, represents a greater challenge for an organization than this remedy would suggest.
Recent Background
Since the 1990s, IT has been seen as a kind of variable that possesses
the great potential to reinvent business. Aspects of this promise affected
many of the core business rules used by successful chief executives and
business managers. While organizations have used IT for the processing of information, decision-support processing, and order ­processing,
the impact of the Internet and e-commerce systems has initiated
­revolutionary responses in every business sector. This economic phenomenon became especially self-evident with the formation of dot-coms
in the mid- and late 1990s. The advent of this phenomenon stressed
the need to challenge fundamental business concepts. Many financial
wizards surmised that new technologies were indeed changing the very
infrastructure of business, affecting how businesses would operate and
compete in the new millennium. Much of this hoopla seemed justified
by the extraordinary potential that technology offered, particularly with
respect to the revolutionizing of old-line marketing principles, for it
was technology that came to violate what was previously thought to be
protected market conditions and sectors. Technology came to reinvent
these business markets and to allow new competitors to cross market in
sectors they otherwise could not have entered.
With this new excitement also came fear— fear that fostered unnatural and accelerated entry into technology because any delay might
sacrifice important new market opportunities. Violating some of their
traditional principles, many firms invested in creating new organizations that would “incubate” and eventually, capture large market
segments using the Internet as the delivery vehicle. By 2000, many of
these dot-coms were in trouble, and it became clear that their notion
of new business models based on the Internet contained significant
flaws and shortfalls. As a result of this crisis, the role and valuation
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of IT is again going through a transformation and once more we are
skeptical about the value IT can provide a business and about the way
to measure the contributions of IT.
IT in the Organizational Context
Technology not only plays a significant role in workplace operations,
but also continues to increase its relevance among other traditional
components of any business, such as operations, accounting, and
marketing (Earl, 1996b; Langer, 2001a; Schein, 1992). Given this
increasing relevance, IT gains significance in relation to
1. The impact it bears on organizational structure
2. The role it can assume in business strategy
3. The ways in which it can be evaluated
4. The extent to which chief executives feel the need to manage
operational knowledge and thus to manage IT effectively
IT and Organizational Structure
Sampler’s (1996) research explores the relationship between IT and
organizational structure. His study indicated that there is no clear-cut
relationship that has been established between the two. However, he
concluded that there are five principal positions that IT can take in
this relationship:
1. IT can lead to centralization of organizational control.
2. Conversely, IT can lead to decentralization of organizational
control.
3. IT can bear no impact on organizational control, its significance being based on other factors.
4. Organizations and IT can interact in an unpredictable
manner.
5. IT can enable new organizational arrangements, such as networked or virtual organizations.
According to Sampler (1996), the pursuit of explanatory models for
the relationship between IT and organizational structure continues
to be a challenge, especially since IT plays dual roles. On the one
T he IT Dil emma
25
hand, it enhances and constrains the capabilities of workers within
the organization, and because of this, it also possesses the ability
to create a unique cultural component. While both roles are active,
their impact on the organization cannot be predicted; instead, they
evolve as unique social norms within the organization. Because IT
has changed so dramatically over the past decades, it continues to be
difficult to compare prior research on the relationship between IT and
organizational structure.
Earl (1996a) studied the effects of applying business process reengineering (BPR) to organizations. BPR is a process that organizations
undertake to determine how best to use technology, to improve business performance. Earl concludes that BPR is “an unfortunate title: it
does not reflect the complex nature of either the distinctive underpinning concept of BPR [i.e., to reevaluate methods and rules of business
operations] or the essential practical challenges to make it happen
[i.e., the reality of how one goes about doing that]” (p. 54).
In my 2001 study of the Ravell Corporation (“Fixing Bad Habits,”
Langer, 2001b), I found that BPR efforts require buy-in from business
line managers, and that such efforts inevitably require the adaptation
by individuals of different cultural norms and practices.
Schein (1992) recognizes that IT culture represents a subculture in
collision with many others within an organization. He concludes that if
organizations are to be successful in using new technologies in a global
context, they must cope with ceaseless flows of information to ensure
organizational health and effectiveness. His research indicates that chief
executive officers (CEOs) have been reluctant to implement a new system of technology unless their organizations felt comfortable with it and
were ready to use it. While many CEOs were aware of cost and efficiency implications in using IT, few were aware of the potential impact
on organizational structure that could result from “adopting an IT view
of their organizations” (p. 293). Such results suggest that CEOs need
to be more active and more cognizant than they have been of potential
shifts in organizational structure when adopting IT opportunities.
The Role of IT in Business Strategy
While many chief executives recognize the importance of IT in
the day-to-day operations of their business, their experience with
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attempting to utilize IT as a strategic business tool, has been frustrating. Typical executive complaints about IT, according to Bensaou and
Earl (1998), fall into five problem areas:
1. A lack of correspondence between IT investments and business strategy
2. Inadequate payoff from IT investments
3. The perception of too much “technology for technology’s
sake”
4. Poor relations between IT specialists and users
5. The creation of system designs that fail to incorporate users’
preferences and work habits
McFarlan created a strategic grid (as presented in Applegate et al.,
2003) designed to assess the impact of IT on operations and strategy.
The grid shows that IT has maximum value when it affects both operations and core business objectives. Based on McFarlan’s hypothesis,
Applegate et al. established five key questions about IT that may be
used by executives to guide strategic decision making:
1. Can IT be used to reengineer core value activities, and change
the basis of competition?
2. Can IT change the nature of the relationship, and the balance
of power, between buyers and sellers?
3. Can IT build or reduce barriers to entry?
4. Can IT increase or decrease switching costs?
5. Can IT add value to existing products and services, or create
new ones?
The research and analysis conducted by McFarlan and Applegate,
respectively, suggest that when operational strategy and its results
are maximized, IT is given its highest valuation as a tool that can
transform the organization. It then receives the maximum focus
from senior management and board members. However, Applegate
et al. (2003) also focus on the risks of using technology. These risks
increase when executives have a poor understanding of competitive
dynamics, when they fail to understand the long-term implications
of a strategic system that they have launched, or when they fail to
account for the time, effort, and cost required to ensure user adoption, assimilation, and effective utilization. Applegate’s conclusion
T he IT Dil emma
27
underscores the need for IT management to educate senior management, so that the latter will understand the appropriate indicators for what can maximize or minimize their investments in
technology.
Szulanski and Amin (2000) claim that while emerging technologies
shrink the window in which any given strategy can be implemented,
if the strategy is well thought out, it can remain viable. Mintzberg’s
(1987) research suggests that it would be useful to think of strategy as
an art, not a science. This perspective is especially true in situations
of uncertainty. The rapidly changing pace of emerging technologies,
we know, puts a strain on established approaches to strategy— that is
to say, it becomes increasingly difficult to find comfortable implementation of technological strategies in such times of fast-moving environments, requiring sophisticated organizational infrastructure and
capabilities.
Ways of Evaluating IT
Firms have been challenged to find a way to best evaluate IT,
­particularly using traditional return on investment (ROI) approaches.
Unfortunately, in this regard, many components of IT do not g­ enerate
direct returns. Cost allocations based on overhead formulas (e.g., costs
of IT as a percentage of revenues) are not applicable to most IT spending needs. Lucas (1999) established nonmonetary methods for evaluating IT. His concept of conversion effectiveness places value on the
ability of IT to complete its projects on time and within its budgets.
This alone is a sufficient factor for providing ROI, assuming that the
project was approved for valid business reasons. He called this overall
process for evaluation the “garbage can” model. It allows organizations
to present IT needs through a funneling pipeline of conversion effectiveness that filters out poor technology plans and that can determine
which projects will render direct and indirect benefits to the organization. Indirect returns, according to Lucas, are those that do not provide directly measurable monetary returns but do provide significant
value that can be measured using his IT investment opportunities
matrix. Utilizing statistical probabilities of returns, the opportunities
matrix provides an effective tool for evaluating the impact of indirect
returns.
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Executive Knowledge and Management of IT
While much literature and research have been produced on how IT
needs to participate in and bring value to an organization, there has
been relatively little analysis conducted on what non-IT chief executives need to know about technology. Applegate et al. (2003) suggest
that non-IT executives need to understand how to differentiate new
technologies from older ones, and how to gauge the expected impact
of these technologies on the businesses, in which the firm competes
for market share. This is to say that technology can change the relationship between customer and vendor, and thus, should be examined
as a potential for providing competitive advantage. The authors state
that non-IT business executives must become more comfortable with
technology by actively participating in technology decisions rather than
delegating them to others. They need to question experts as they would
in the financial areas of their businesses. Lou Gerstner, former CEO
of IBM, is a good example of a non-IT chief executive who acquired
sufficient knowledge and understanding of a technology firm. He was
then able to form a team of executives who better understood how to
develop the products, services, and overall business strategy of the firm.
Allen and Percival (2000) also investigate the importance of nonIT executive knowledge and participation with IT: “If the firm lacks
the necessary vision, insights, skills, or core competencies, it may be
unwise to invest in the hottest [IT] growth market” (p. 295). The
authors point out that success in using emerging technologies is different from success in other traditional areas of business. They concluded that non-IT managers need to carefully consider expected
synergies to determine whether an IT investment can be realized and,
especially, whether it is efficient to earn cost of capital.
Recent studies have focused on four important components in the
linking of technology and business: its relationship to organizational
structure, its role in business strategy, the means of its evaluation, and
the extent of non-IT executive knowledge in technology. The challenge in determining the best organizational structure for IT is posed
by the accelerating technological advances since the 1970s and by the
difficulty in comparing organizational models to consistent business
cases. Consequently, there is no single organizational structure that
has been adopted by businesses.
T he IT Dil emma
29
While most chief executives understand the importance of using
technology as part of their business strategy, they express frustration in determining how to effectively implement a technology-based
strategic approach. This frustration results from difficulties in understanding how IT investments relate to other strategic business issues,
from difficulty in assessing payoff and performance of IT generally
and from perceived poor relations between IT and other departments.
Because most IT projects do not render direct monetary returns, executives find themselves challenged to understand technology investments.
They have difficulty measuring value since traditional ROI formulas are
not applicable. Thus, executives would do better to focus on valuing technology investments by using methods that can determine payback based
on a matrix of indirect returns, which do not always include monetary
sources. There is a lack of research on the question of what general knowledge non-IT executives need to have to effectively manage the strategic
use of technology within their firms. Non-IT chief executives are often
not engaged in day-to-day IT activities, and they often delegate dealing
with strategic technology issues to other managers. The remainder of this
chapter examines the issues raised by the IT dilemma in its various guises
especially as they become relevant to, and are confronted from, the top
management or chief executive point of view.
IT: A View from the Top
To investigate further the critical issues facing IT, I conducted a study
in which I personally interviewed over 40 chief executives in various industries, including finance/investment, publishing, insurance,
wholesale/retail, and hotel management. Executives interviewed
were either the CEO or president of their respective corporations. I
canvassed a population of New York-based midsize corporations for
this interview study. Midsize firms, in our case, comprise businesses
of between 200 and 500 employees. Face-to-face interviews were
conducted, to allow participants the opportunity to articulate their
responses, in contrast to answering printed survey questions; executives were therefore allowed to expand, and clarify, their responses to
questions. An interview guide (see questions in Tables 2.1 through
2.3) was designed to raise issues relevant to the challenges of using
technology, as reported in the recent research literature, and to
30
Table 2.1  
IN F ORM ATI ON TEC HNOLO GY
Perception and Role of IT
QUESTION
1. How do you define the role and the
mission of IT in your firm?
2. What impact has the Internet had
on your business strategy?
3. Does the firm have its own internal
software development activity? Do
you develop your own in-house
software or use software
packages?
4. What is your opinion of
outsourcing? Do you have the need
to outsource technology? If so, how
is this accomplished?
5. Do you use consultants to help
formulate the role of IT? If yes,
what specific roles do they play? If
not, why?
6. Do you feel that IT will become
more important to the strategy of
the business? If yes, why?
7. How is the IT department viewed
by other departments? Is the IT
department liked, or is it
marginalized?
8. Do you feel there is too much
“ hype” about the importance and
role of technology?
9. Have the role and the uses of
technology in the firm significantly
changed over the last 5 years? If
so, what are the salient changes?
ANALYSIS
Fifty-seven percent responded that their IT
organizations were reactive and did not really have a
mission. Twenty-eight percent had an IT mission that
was market driven; that is, their IT departments were
responsible for actively participating in marketing
and strategic processes.
Twenty-eight percent felt the impact was insignificant,
while 24% felt it was critical. The remaining 48% felt
that the impact of the Internet was significant to daily
transactions.
Seventy-six percent had an internal development
organization. Eighty-one percent had internally
developed software.
Sixty-two percent had outsourced certain aspects of
their technology needs.
Sixty-two percent of the participants used consultants
to assist them in formulating the role of IT.
Eighty-five percent felt that IT had recently become
more important to the strategic planning of the
business.
Twenty-nine percent felt that IT was still marginalized.
Another 29% felt it was not very integrated. Thirty-eight
percent felt IT was sufficiently integrated within the
organization, but only one chief executive felt that IT
was very integrated with the culture of his firm.
Fifty-three percent felt that there was no hype. However,
32% felt that there were levels of hype attributed to the
role of technology; 10% felt it was “all hype.”
Fourteen percent felt little had changed, whereas 43%
stated that there were moderate changes. Thirty-eight
percent stated there was significant change.
consider significant phenomena, that could affect changes in the uses
of technology, such as the Internet. The interview discussions focused
on three sections: (1) chief executive perception of the role of IT, (2)
management and strategic issues, and (3) measuring IT performance
and activities. The results of the interviews are summarized next.
31
T he IT Dil emma
Table 2.2  
Management and Strategic Issues
QUESTION
ANALYSIS
1. What is the most senior title held
by someone in IT? Where does
this person rank on the
organization hierarchy?
2. Does IT management ultimately
report to you?
3. How active are you in working
with IT issues?
4. Do you discuss IT strategy with
your peers from other firms?
5. Do IT issues get raised at board,
marketing, and/or strategy
meetings?
6. How critical is IT to the
day-to-day business?
Table 2.3  
Sixty-six percent called the highest position chief
information officer (CIO). Ten percent used managing
director, while 24% used director as the highest title.
Fifty percent of IT leaders reported directly to the chief
executive (CEO). The other half reported to either the
chief financial officer (CFO) or the chief operating
officer (COO).
Fifty-seven percent stated that they are very active— on
a weekly basis. Thirty-eight percent were less active or
inconsistently involved, usually stepping in when an
issue becomes problematic.
Eighty-one percent did not communicate with peers at
all. Only 10% actively engaged in peer-to-peer
communication about IT strategy.
Eighty-six percent confirmed that IT issues were
regularly discussed at board meetings. However, only
57% acknowledged IT discussion during marketing
meetings, and only 38% confirmed like discussions at
strategic sessions.
Eighty-two percent of the chief executives felt it was very
significant or critical to the business.
Measuring IT Performance and Activities
QUESTION
1. Do you have any view of how IT
should be measured and
accounted for?
2. Are you satisfied with IT
performance in the firm?
3. How do you budget IT costs? Is it
based on a percentage of gross
revenues?
4. To what extent do you perceive
technology as a means of
increasing marketing or
productivity or both?
5. Are Internet/Web marketing
activities part of the IT function?
ANALYSIS
Sixty-two percent stated that they had a view on
measurement; however, there was significant
variation in how executives defined measurement.
There was significant variation in IT satisfaction. Only
19% were very satisfied. Thirty-three percent were
satisfied, another 33% were less satisfied, and 14%
were dissatisfied.
Fifty-seven percent stated that they did not use gross
revenues in their budgeting methodologies.
Seventy-one percent felt that technology was a
significant means of increasing both marketing and
productivity in their firms.
Only 24% stated that Internet/Web marketing efforts
reported directly to the IT organization.
32
IN F ORM ATI ON TEC HNOLO GY
Section 1: Chief Executive Perception of the Role of IT
This section of the interview focuses on chief executive perceptions of
the role of IT within the firm. For the first question, about the role
and mission of IT, over half of the interviewees responded in ways
that suggested their IT organizations were reactive, without a strategic mission. One executive admitted, “IT is not really defined. I guess
its mission is to meet our strategic goals and increase profitability.”
Another response betrays a narrowly construed understanding of its
potential: “The mission is that things must work— zero tolerance for
failure.” These two responses typify the vague and generalized perception that IT “has no explicit mission” except to advance the important
overall mission of the business itself. Little over a quarter of respondents could confirm a market-driven role for IT; that is, actively participating in marketing and strategic processes. Question 2, regarding
the impact of the Internet on business strategy, drew mixed responses.
Some of these revealed the deeply reflective challenges posed by the
Internet: “I feel the Internet forces us to take a longer-term view and a
sharper focus to our business.” Others emphasized its transformative
potential: “The Internet is key to decentralization of our offices and
business strategy.”
Questions 3 and 4 focused on the extent to which firms have their own
software development staffs, whether they use internally developed or
packaged software, and whether they outsource IT services. Control over
internal development of systems and applications remained important to
the majority of chief executives: “I do not like ­outsourcing—surrender
control, and it’s hard to bring back.” Almost two‑thirds of the participants employed consultants to assist them in formulating the role of IT
within their firms but not always without reservation: “Whenever we
have a significant design issue we bring in consultants to help us—but
not to do actual development work.” Only a few were downright skeptical: “I try to avoid consultants—what is their motivation?” The perception of outsourcing is still low in midsize firms, as compared to the recent
increase in IT outsourcing abroad. The lower use could be related to the
initial costs and management overheads that are required to properly
implement outsource operations in foreign countries.
A great majority of chief executives recognized some form of the
strategic importance of IT to business planning: “More of our business
T he IT Dil emma
33
is related to technology and therefore I believe IT is more important
to strategic planning.” Still, this sense of importance remained somewhat intuitive: “I cannot quantify how IT will become more strategic
to the business planning— but I sense that job functions will be dramatically altered.” In terms of how IT is viewed by other departments
within the firm, responses were varied. A little over a third of respondents felt IT was reasonably integrated within the organization: “The
IT department is vitally important— but rarely noticed.” The majority of respondents, however, recognized a need for greater integration: “IT was marginalized— but it is changing. While IT drives the
­system— it needs to drive more of the business.” Some articulated
clearly the perceived problems: “IT needs to be more proactive— they
do not seem to have good interpersonal skills and do not understand
corporate politics.” A few expressed a sense of misgiving (“IT people
are strange— personality is an issue”) and even a sense of hopelessness: “People hate IT— particularly over the sensitivity of the data. IT
sometimes is viewed as misfits and incompetent.”
Question eight asked participants whether they felt there was too
much “hype” attributed to the importance of technology in business.
Over half responded in the negative, although not without reservation: “I do not think there is too much hype— but I am disappointed.
I had hoped that technology at this point would have reduced paper,
decreased cost— it just has not happened.” Others felt that there is
indeed some degree of sensationalism: “I definitely think there is too
much hype— everyone wants the latest and greatest.” Hype in many
cases can be related to a function of evaluation, as in this exclamation: “The hype with IT relates more to when will we actually see
the value!” The last question in this section asks whether the uses of
technology within the firm had significantly changed over the last
five years. A majority agreed that it had: “The role of IT has changed
significantly in the last five years—we need to stay up-to-date because
we want to carry the image that we are ‘ on the ball’.” Many of these
stressed the importance of informational flows: “I find the ‘ I’ [information] part to be more and more important and the ‘ T’ [technology] to be diminishing in importance.” Some actively downplayed the
significance: “I believe in minimizing the amount of technology we
use—people get carried away.”
34
IN F ORM ATI ON TEC HNOLO GY
Section 2: Management and Strategic Issues
This section focuses on questions pertaining to executive and management organizational concerns. The first and second questions
asked executives about the most senior title held by an IT officer
and about the reporting structure for IT. Two-thirds of the participants ranked their top IT officer as a chief information officer
(CIO). In terms of organizational hierarchy, half of the IT leaders
were at the second tier, reporting directly to the CEO or president, while the other half were at the third tier, reporting either
to the chief financial officer (CFO) or to the chief operating officer (COO). As one CEO stated, “Most of my activity with IT is
through the COO. We have a monthly meeting, and IT is always
on the agenda.”
The third question asked executives to consider their level of
involvement with IT matters. Over half claimed a highly active relationship, engaging on a weekly basis: “I like to have IT people close
and in one-on-one interactions. It is not good to have artificial barriers.” For some, levels of involvement may be limited: “I am active with
IT issues in the sense of setting goals.” A third of participants claimed
less activity, usually becoming active when difficulties arose. Question
four asked whether executives spoke to their peers at other firms about
technology issues. A high majority managed to skip this potential for
communication with their peers. Only one in 10 actively pursued this
matter of engagement.
Question 5 asked about the extent to which IT issues were
discussed at board meetings, marketing meetings, and business
strategy sessions. Here, a great majority confirmed that there was
regular discussion regarding IT concerns, especially at board meetings. A smaller majority attested to IT discussions during marketing meetings. Over a third reported that IT issues maintained a
presence at strategic sessions. The higher incidence at board meetings may still be attributable to the effects of Year 2000 (Y2K)
preparations. The final question in this section concerned the level
of criticality for IT in the day-to-day operations of the business. A
high majority of executives responded affirmatively in this regard:
“IT is critical to our survival, and its impact on economies of scale
is significant.”
T he IT Dil emma
35
Section 3: Measuring IT Performance and Activities
This section is concerned with how chief executives measured IT performance and activities within their firms. The first question of this
section asked whether executives had a view about how IT performance
should be measured. Almost two‑thirds affirmed having some formal
or informal way of measuring performance: “We have no formal process of measuring IT other than predefined goals, cost constraints, and
deadlines.” Their responses demonstrated great variation, sometimes
leaning on cynicism: “I measure IT by the number of complaints I
get.” Many were still grappling with this challenge: “Measuring IT is
unqualified at this time. I have learned that hours worked is not the way
to measure IT—it needs to be more goal-­oriented.” Most chief executives expressed some degree of quandary: “We do not feel we know
enough about how IT should be measured.” Question two asked executives to rate their satisfaction with IT performance. Here, also, there
was significant variation. A little more than half expressed some degree
of satisfaction: “Since 9/11 IT has gained a lot of credibility because of
the support that was needed during a difficult time.” Slightly fewer than
half revealed a degree of dissatisfaction: “We had to overhaul our IT
department to make it more customer-service oriented.”
Question three concerned budgeting; that is, whether or not chief
executives budgeted IT costs as a percentage of gross revenues. Over
half denied using gross revenues in their budgeting method: “When
handling IT projects we look at it on a request-by-request basis.”
The last two questions asked chief executives to assess the impact of
technology on marketing and productivity. Almost three quarters of
the participants felt that technology represented a significant means of
enhancing both marketing and productivity. Some maintained a certainty of objective: “We try to get IT closer to the customer— having
them understand the business better.” Still, many had a less-defined
sense of direction: “I have a fear of being left behind, so I do think IT
will become more important to the business.” And others remained
caught in uncertainty: “I do not fully understand how to use technology in marketing— but I believe it’s there.” Chief executive certainty,
in this matter, also found expression in the opposite direction: “IT
will become less important— it will be assumed as a capability and a
service that companies provide to their customers.” Of the Internet/
36
IN F ORM ATI ON TEC HNOLO GY
Web marketing initiatives, only one quarter of these reported directly
to the IT organization: “IT does not drive the Web activities because
they do not understand the business.” Often, these two were seen as
separate or competing entities of technology: “Having Web development report to IT would hinder the Internet business’s growth potential.” Yet, some might be willing to explore a synergistic potential:
“We are still in the early stages of understanding how the Internet
relates to our business strategy and how it will affect our product line.”
General Results
Section 1 revealed that the matter of defining a mission for the IT
organization remains as unresolved as finding a way to reckon with the
potential impact of IT on business strategy. Executives still seemed to
be at a loss on the question of how to integrate IT into the workplace—a
human resource as well as a strategic issue. There was uncertainty regarding the dependability of the technology information received. Most
agreed, however, in their need for software development departments to
support their internally developed software, in their need to outsource
certain parts of technology, and in their use of outside consultants to
help them formulate the future activities of their IT departments.
Section 2 showed that while the amount of time that executives spent
on IT issues varied, there was a positive correlation between a structure in
which IT managers reported directly to the chief executive and the degree
of activity that executives stated they had with IT matters. Section 3
showed that chief executives understood the potential value that technology can bring to the marketing and productivity of their firms. They did
not believe, however, that technology can go unmeasured; there needs
to be some rationale for allotting a spending figure in the budget. For
most of the firms in this study, the use of the Internet as a technological
vehicle for future business was not determined by IT. This suggests that
IT does not manage the marketing aspects of technology, and that it has
not achieved significant integration in strategic planning.
Defining the IT Dilemma
The variations found in this study in terms of where IT reports, how
it is measured, and how its mission is defined were consistent with
T he IT Dil emma
37
existing research. But, the wide-ranging inconsistencies and uncertainties among executives described here left many of them wondering whether they should be using IT as part of their business strategy
and operations. While this quandary does not in itself suggest an
inadequacy, it does point to an absence of a “best practices” guideline
for using technology strategically. Hence, most businesses lacked a
clear plan on how to evolve IT contributions toward business development. Although a majority of respondents felt that IT was critical to
the survival of their businesses, the degree of IT assimilation within
the core culture of organizations still varied. This suggests that the
effects of cultural assimilation lag behind the actual involvement of
IT in the strategic direction of the company.
While Sampler (1996) attributes many operational inconsistencies to
the changing landscape of technology, the findings of this study suggest
that there is also a lack in professional procedures, rules, and established
governance, that could support the creation of best practices for the
profession. Bensaou and Earl (1998), on the one hand, have addressed
this concern by taking a pro-Japanese perspective in extrapolating from
five “Western” problems five “general” principles, presumably not culture bound, and thence a set of “best principles” for managing IT. But,
Earl et al. (1995), on the other hand, have sidestepped any attempt to
incorporate Earl’s own inductive approach discussed here; instead, they
favor a market management approach, based on a supply-and-demand
model to “balance” IT management. Of course, best practices already
embody the implicit notion of best principles; however, the problems
confronting executives—the need for practical guidelines—remain. For
instance, this study shows that IT performance is measured in many
different ways. It is this type of practical inconsistency that leaves chief
executives with the difficult challenge of understanding how technology decisions can be managed.
On a follow-up call related to this study, for example, a CEO
informed me of a practical yet significant difference she had instituted
since our interview. She stated:
The change in reporting has allowed IT to become part of the mainstream vision of the business. It now is a fundamental component of all
discussions with human resources, sales and marketing, and accounting.
The change in reporting has allowed for the creation of a critical system,
38
IN F ORM ATI ON TEC HNOLO GY
which has generated significant direct revenues for the business. I attribute this to my decision to move the reporting of technology directly
to me and to my active participation in the uses of technology in our
business.
This is an example of an executive whom Schein (1994) would
call a “change agent”— someone who employs “cognitive redefinition
through scanning,” in this case to elicit the strategic potential of IT.
We might also call this activity reflective thinking (Langer, 2001b).
Schein’s change agents, however, go on to “acknowledge that future
generations of CEOs will have been educated much more thoroughly
in the possibilities of the computer and IT, thus enabling them to take
a hands-on adopter stance” (p. 343). This insight implies a distancing (“future”) of present learning responsibilities among current chief
executives. The nearer future of this insight may instead be seen in
the development of organizational learning.* These are two areas of
contemporary research that begin to offer useful models in the pursuit
of a best practices approach to the understanding and managing of IT.
If the focus of this latter study was geared toward the evaluation of
IT based on the view of the chief executive, it was, indeed, because
their views necessarily shape the very direction for the organizations
that they manage. Subsequent chapters of this book examine how
the various dilemmas surrounding IT that I have discussed here are
affecting organizations and how organizational learning practices can
help answer many of the issues of today as raised by executives, managers, and operations personnel.
Recent Developments in Operational Excellence
The decline in financial markets in 2009, and the continued increase
in mergers and acquisitions due to global competition have created an
interesting opportunity for IT that reinforces the need for integration
via organizational learning. During difficult economic periods, IT
has traditionally been viewed as a cost center and had its operations
* My case study “Fixing Bad Habits” (Langer, 2001b) has shown that integrating
the practices of reflective thinking, to support the development of organizational
learning, has greatly enhanced the adaptation of new technologies, their strategic
valuation to the firm, and their assimilation into the social norms of the business.
T he IT Dil emma
39
reduced (I discuss this further in Chapter 3, in which I introduce
the concept of drivers and supporters). However, with the growth in
the role of technology, IT management has now been asked to help
improve efficiency through the use of technology across departments.
That is, IT is emerging as an agent for business transformation in a
much stronger capacity than ever before. This phenomenon has placed
tremendous pressure on the technology executive to align with his or
her fellow executives in other departments and to get them to participate in cost reductions by implementing more technology. Naturally,
using technology to facilitate cuts to the workforce is often unpopular,
and there has been much bitter fallout from such cross-department
reductions. Technology executives thus face the challenge of positioning themselves as the agents of a necessary change. However, operational excellence is broader than just cutting costs and changing the
way things operate; it is about doing things efficiently and with quality measures across corporate operations. Now that technology affects
every aspect of operations, it makes sense to charge technology executives with a major responsibility to get it accomplished.
The assimilation of technology as a core part of the entire organization is now paramount for survival, and the technology executive of today and certainly tomorrow will be one who understands
that operational excellence through efficiency must be accomplished
by educating business units in self-managing the process. The IT
executive, then, supports the activity as a leader, not as a cost cutter who invades the business. The two approaches are very different,
and adopting the former can result in significant long-term results in
strategic alignment.
My interviews with CEOs supported this notion: The CEO does
not want to be the negotiator; change must be evolutionary within the
business units themselves. While taking this kind of role in organizational change presents a new dilemma for IT, it can also be an opportunity for IT to position itself successfully within the organization.
3
Technolo gy as a
Variable and R esp onsi v e
O rg aniz ati o nal D ynamism
Introduction
This chapter focuses on defining the components of technology and
how they affect corporate organizations. In other words, if we step
back momentarily from the specific challenges that information technology (IT) poses, we might ask the following: What are the generic
aspects of technology that have made it an integral part of strategic and
competitive advantage for many organizations? How do organizations
respond to these generic aspects as catalysts of change? Furthermore,
how do we objectively view the role of technology in this context, and
how should organizations adjust to its short- and long-term impacts?
Technological Dynamism
To begin, technology can be regarded as a variable, independent
of others, that contributes to the life of a business operation. It is
capable of producing an overall, totalizing, yet distinctive, effect on
­organizations— it has the unique capacity to create accelerations of
corporate events in an unpredictable way. Technology, in its aspect of
unpredictability, is necessarily a variable, and in its capacity as accelerator— its tendency to produce change or advance— it is dynamic.
My contention is that, as a dynamic kind of variable, technology, via
responsive handling or management, can be tapped to play a special
role in organizational development. It can be pressed into service as
the dynamic catalyst that helps bring organizations to mat…
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